Big issues up in the air as Legislature prepares to close its regular session

The Legislature shuts down at midnight Wednesday, at least for its regular 2021 session. Lawmakers then convene a special session called by Gov. Mike Dunleavy Thursday morning.

A lot of big issues are still being bounced around including the amount of this year’s Permanent Fund Dividend; how the $1 billion-plus in new federal pandemic aid can be spent, and a proposal for “forward funding” of education so school districts can better plan their budgets.

It’s unclear whether any of this can get done by Wednesday night, or how long lawmakers will have to stay in Juneau for the special session.

In a special session called by the governor, he or she sets the agenda by listing the bills to be considered. Dunleavy has listed budget work, if the budget isn’t done Wednesday night, as well as his “50-50” Permanent Fund Dividend plan being put in the state Constitution.

Any bills active in the regular session that aren’t passed cannot be considered in a special session. They don’t die, but just go into hibernation to be taken up neat January in the 2022 regular session, but not before.

The question on the table now is whether exhausted lawmakers can deal with the PFD and constitutional amendment in the special session starting Thursday. Senate President Peter Micciche, R-Kenai, thinks legislators need a break. He still has hopes work on the state budget can be wrapped on Wednesday, but if it isn’t a days is the special session may be needed.

There just won’t be enough energy left in the House and Senate to tackle the governor’s 50-50 PFD plan in the Constitution, at least right away. Micciche said he believes the governor’s plan has merit, but legislators need to spend time to understand it.

They should take a break, go home to rest, and convene as legislative committees in June and July to learn more. Committee meetings can be held outside of Juneau.

Dunleavy has called a second special session In August, and that would be the time for legislators to come back to the capital to vote on the governor’s proposals, Micciche said.

It won’t be productive for legislators to sit around in Juneau for 30 days, he said. This would not achieve the governor’s goal for approval of the 50-50 plan and constitutional amendment.

The 50-50 plan involves splitting annual Percent-of-Market-Value payment made from Permanent Fund earnings to help support the state budget. This amounts to about $3 billion a year, which will grow as the Fund, and its income, grows.

Micciche said also that if 50-50 is adopted there must be a way of filling the billion-dollar-plus hole this would create in state finances, caused by taking the money for the dividend. This should prompt a discussion of new revenues, he said.

The governor’s agenda for the second special session called in August includes “new revenues,” but what this means is unclear.

Micciche said his own preferred new revenue source is a state sales tax, but legislators will also put an “adjustment” in oil and gas taxes on the table. Legislative insiders know an adjustment means an increase.

Meanwhile, a few bills, but not many, will make it through the gate by adjournment Wednesday. This isn’t unusual for a first session, as almost all bills remain alive through the interim.

Some bills that are facing deadlines are quite likely to make it absent a blowup of some kind. This includes an extension of the funding to regional training centers paid for by taxes on wage and salary employees put into a training funds, and a bill that expands the industrial hemp agriculture program.

Funding authorization for the training centers expires this year unless the Legislature extends it in a bill. Similarly, the bill on industrial hemp is needed to meet requirements of the 2018 federal farm bill. Doing that means passing a bill this year.

There are other bills at advanced stages that may make it by late Wednesday. A bill allowing shellfish hatcheries, in HB 41, and another extending the fisheries landing tax credit extension, are both are well advanced.

However, other bills that are well advanced, like one expanding pre-K and early learning, will now wait until 2022.

Meanwhile, among last-minute amendments proposed for the state capital, or construction, budget in the Senate are items of interest in the Mat-Su.

One is a $10 million appropriation for more work on the West Susitna resource road to the western Matanuska-Susitna Borough region. This funding was originally proposed in the governor’s general obligation bond bill, but that is now off the table. The money would pay for permit work and feasibility studies to get the project ready to start a federal Environmental Impact Statement

Another $10 million appropriation is proposed to go to the Matanuska-Susitna Borough for pavement repair on borough roads. Some state roads in the borough will be included in this

A $5 million appropriation is proposed for the Nenana-Totchaket agricultural project west of Nenana. The state is in the third year of planning this. First sales of farm tracts are planned later this year.

These are proposed by the state administration, so there is no guarantee yet they will wind up in the final budget. But support by the governor improves the chances for these making it through the gate.